Options Expiration: Historical Strength

Options expiration weeks are historically bullish. You’ve probably intuitively understood this to be true but couldn’t quite quantify it. I’m not sure what forces are at work beneath the surface, but it is a seasonal phenomenon that is very difficult to ignore.

We pulled a study of Options Expiration weeks for the last two years, using the 20-day moving average as a filter because the $SPY just crossed back above the 20-day. If you ignore the stats (which are impressive) and just look at the Alpha Curves, you’ll see two very clear patterns unfold. The first is the relentless drift higher, and the second is the false breakdown towards the end of the week and then a rip higher.

Options expiration is a predominantly bullish phenomenon where it doesn’t pay to fight the melt higher. If you’re lucky enough to see a pullback it can offer a very clear risk to reward setup.

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